Lundin Launches Hostile Bid After Nevsun Rebuffs Advances

(Bloomberg) -- Lundin Mining Corp. formally launched its hostile takeover of Nevsun Resources Ltd. Thursday after it said successive proposals to buy the Vancouver-based miner were rejected by its board.

Paul Conibear, Lundin’s chief executive officer, urged Nevsun shareholders to support the takeover, arguing the company will need significant financing to develop its Timok copper-gold project in Serbia and the Bisha mine in Eritrea. There is a risk they won’t be developed properly without it, he said.

He argued Lundin is better positioned to provide that financing and develop the projects. Lundin has been trying to reach an agreement to acquire Nevsun since October.

“Each of five successive proposals made since early February were rejected by Nevsun despite multiple moves by us to address their concerns on structure, bidding partner and price,” Conibear said Thursday on a conference call. “Each time we presented a proposal, the goal post changed.”

He said his firm is better able to provide financing to develop the project over the next four or five years than Nevsun could on its own. He pointed to the development of its nickel-copper Eagle Mine in Michigan and its Candelaria mining complex in Chile as examples of its successful track record.

‘Not Limited’

Conibear said Lundin wasn’t limited by financial capacity to invest in new assets and optimize them. He said Lundin would ramp up exploration on Timok once it got its feet on the ground and fast track the development of its upper zone.

Lundin would take a “wait and see” approach to Bisha, Conibear said. He said the mine has had a great history and that he knew there is a lot of untapped geological potential in the region because one of the Lundin group companies used to own two of the deposits.

Bisha is currently estimated to have about four years worth of production left, but Lundin may be able to extend the mine’s life, said Marie Inkster, Lundin’s chief financial officer who will take over from Conibear as CEO by the end of the year.

‘Track Record’

“We need to get in there and have a look and see what kind of value Lundin can add because we’ve shown a track record of being able to go in and extend the mine life,” she told BNN Bloomberg TV in an interview Thursday.

Conibear warned that Nevsun’s shares would likely plunge if the deal is rejected.

Lundin commenced its tender offer to acquire Nevsun Thursday before markets opened. Under the terms of the offer, Nevsun shareholders would receive C$4.75 ($3.63) in cash for each Nevsun share tendered, representing an 82 percent premium to the closing price of C$2.61 on Feb. 6, the date it first proposed taking over the company. Nevsun holders have until Nov. 9 to tender their shares.

Nevsun rose 0.6 percent in Toronto to C$4.79 at 1:20 p.m., giving the miner a market value of C$1.45 billion.

‘Detailed Response’

Nevsun said Thursday in an emailed statement that it was reviewing the offer and urged shareholders to take no action. “The company will have a more detailed response once it completes its review of the offer,” it said. Nevsun has said Lundin’s offers undervalue the company.

Toronto-based Lundin Mining had announced Wednesday that Inkster would take over as CEO from Conibear, 61, who will retire. Conibear told BNN Bloomberg he wouldn’t stay on the company’s board. “I don’t think it would be appropriate. Marie needs full rein without somebody hanging around,” he said.

Inkster dismissed analysts’ concerns that a management change in the middle of a takeover bid was awkward. “Paul and I are aligned in the approach,” Inkster told BNN Bloomberg. “We’re going to work very hard to make sure that the shareholders of Nevsun understand the value that we’re offering and that we have a successful tender.”

Inkster has almost 20 years experience in the industry, including a decade with Lundin. Prior to joining the company, she held various senior positions, including as a vice-president position at LionOre Mining International Ltd.

--With assistance from Natalie Obiko Pearson.

To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Steven Frank, David Scanlan

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